Correlation Between ASTORY CoLtd and YG Entertainment

Can any of the company-specific risk be diversified away by investing in both ASTORY CoLtd and YG Entertainment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ASTORY CoLtd and YG Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASTORY CoLtd and YG Entertainment, you can compare the effects of market volatilities on ASTORY CoLtd and YG Entertainment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ASTORY CoLtd with a short position of YG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASTORY CoLtd and YG Entertainment.

Diversification Opportunities for ASTORY CoLtd and YG Entertainment

0.48

Correlation Coefficient

ASTORY CoLtd  YG Entertainment

Very weak diversification

The 3 months correlation between ASTORY and 122870 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ASTORY CoLtd and YG Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YG Entertainment and ASTORY CoLtd is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ASTORY CoLtd are associated (or correlated) with YG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YG Entertainment has no effect on the direction of ASTORY CoLtd i.e., ASTORY CoLtd and YG Entertainment go up and down completely randomly.

Pair Corralation between ASTORY CoLtd and YG Entertainment

Assuming the 90 days trading horizon ASTORY CoLtd is expected to generate 2.43 times less return on investment than YG Entertainment. In addition to that, ASTORY CoLtd is 1.12 times more volatile than YG Entertainment. It trades about 0.06 of its total potential returns per unit of risk. YG Entertainment is currently generating about 0.15 per unit of volatility. If you would invest  3,530,000  in YG Entertainment on September 26, 2024 and sell it today you would earn a total of  955,000  from holding YG Entertainment or generate 27.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ASTORY CoLtd  vs.  YG Entertainment

ASTORY CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASTORY CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASTORY CoLtd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

YG Entertainment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YG Entertainment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YG Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASTORY CoLtd and YG Entertainment

The main advantage of trading using opposite ASTORY CoLtd and YG Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASTORY CoLtd position performs unexpectedly, YG Entertainment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in YG Entertainment will offset losses from the drop in YG Entertainment's long position.

The idea behind ASTORY CoLtd and YG Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.